Let the Easing Continue! — Wednesday’s IP Market Recap

by Marc Bastow | December 12, 2012 5:02 pm

[1]Markets reacted positively for most of the day on the much anticipated[2] announcement that the Federal Reserve would continue providing the U.S. economy with more stimulus in the form of a continuation of its quantitative easing policy.

The central bank said it would continue its quantitative easing program by buying $45 billion of Treasuries each month beginning in 2013, and also would continue buying $40 billion of mortgage-backed securities. It expects to keep rates low until the unemployment rate, now at 7.7%, hits 6.5%.

But the news wasn’t positive enough to offset more fiscal cliff posturing, as House Speaker John Boehner warned his congressional colleagues about heading out on a Christmas break anytime soon.

By the end of the day the markets were mixed. The Nasdaq came out the big loser, down 0.28% to 3,013.82, the S&P 500 managed to hold on to its modest gains, up a fraction at 1,428.48, and the Dow lost a fraction to 13,245.45.

Trading in shares of Berkshire Hathaway (NYSE:BRK.A[3], BRK.B[4]) was briefly halted ahead of an announcement that Warren Buffett’s firm bought 9,200 of its Class A shares for $131,000 apiece[5] from the estate of a longtime shareholder. All the other investors who stayed in the stock despite the news were rewarded with 2.5% jump in the stock.

Netflix (NASDAQ:NFLX[6]) continued a recent run after its partnership agreement with Disney (NYSE:DIS[7]), rising more than 5% on a Morgan Stanley analyst report targeting $105 per share. NFLX has advanced around 16% in the past month.

Coinstar (NASDAQ:CSTR[8]), which announced that its new video streaming service[9] will be priced at $8 per month, the same as Netflix, rose more than 2%.